Iceland has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”). On 7 June 2017, over 70 Ministers and other high-level representatives participated in the signing ceremony at Paris.
The Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide.
The Convention enables all signatories, inter alia, to meet treaty-related minimum standards that were agreed as part of the Final BEPS package, including the minimum standard for the prevention of treaty abuse under Action 6. The Convention will enter into force after signatories have completed their domestic requirements and deposited their instruments of ratification with the OECD.
On 29 May 2017, the Japanese Ministry of Finance announced that the Government of Japan and the Government of Iceland have agreed in principle on the tax convention between Japan and Iceland.
This new agreement will be signed after the necessary internal procedures have been completed by each of the two governments. Thereafter, the new Convention will enter into force after the completion of the approval procedure in both countries.
Regulation no. 1166/2016 on the documentation for CbCR (Country-by-Country Reporting) has been further revised by regulation no. 245/2017 on 24 March 2017. The revised regulation is effective on or after 24 March 2017. The revision incorporates two extra adjustments:
- According to Regulation no.245/2017, Country-by-Country Reporting should include the applicable information on an aggregate basis for all entities within each country. In the previous regulation no. 1166/2016, this information was requested for each entity instead of collectively for each country.
- The Country-by-Country report must be filed with the Directorate of Internal Revenue before the end of each calendar year or by the end of the financial year. In the previous regulation no. 1166/2016, the CbCR was to be filed no later than 12 months after the close of the group’s financial year.
The Government of Japan and the Government of the Republic of Iceland will initiate negotiations for a tax convention between the two countries.
The first round of negotiations will take place on May 17 in Tokyo. Further details of this treaty will be reported later.
The Minister of Finance and Economic Affairs announced fiscal plan for 2018 to 2020 to reduce the standard VAT rate from 24% to 22.5%. This plan will be effective from 1st 2019.
The Ministry of Finance and Economic Affairs issued Regulation No. 245/2017 amending Regulation No. 1166/2016 regarding country-by-country (CbC) reporting on 24 March 2017. The amendment aligns the wording of article 4 of the model provision related to CbC reporting in the OECD BEPS Action 13.
Competent authority agreement on automatic exchange of information (TIEA) of 2016 between Iceland – Singapore has been entered into force on 31st January 2017 regarding tax.
The agreement is intended to ensure that Iceland and Singapore will be able to start the automatic exchange of financial account information as of 2018 according to the OECD Automatic Exchange of Information Agreement (MCAA) of 2014, based on the Council of Europe – OECD Convention on Mutual Administrative Assistance in Tax Matters (MAA) of 1988. This TIEA of 2014 has been amended by the 2010 protocol.